Goals-based financial advice ‘set to take centre stage’

Goals-based financial advice is “set to take centre stage” as the Quality of Advice Review (QAR) looms closer, according to a local industry head.

In a new opinion piece published on ifa this week, Midwinter’s head of product, Andrew Zietara, has claimed that while the industry has been discussing goals-based advice for some time only “few” practice it and how to deliver it “still seems unclear”.

“The initial results from the Quality of Advice Review indicate a move towards regulating the outcome of advice rather than the process. Goals-based advice represents the epitome of the proposed obligation to provide ‘good advice’ as it is directly shaped around the goals of the client,” Mr Zietara wrote.

“And while most advisers would acknowledge that a client’s objectives should always be the starting point for advice, traditional technology hasn’t kept pace.

“Many goals-based solutions have tended to be too simplistic to provide useful results or over-engineered and complex; finding the right balance is crucial.”

The financial advice software provider head suggested that current market conditions, including rising inflation, has highlighted a need to shift to goal-based advice as the approach can help evaluate whether a client’s goals are still achievable.

“It can substantially improve the outcome of advice — even the act of writing down goals significantly increases the odds of achieving them,” he wrote.

Mr Zietara's comments come after senior adviser at Tribeca Financial and director at Ethos Australia, Nathan Fradley, noted a rising interest by financial advisers in the “human side” of advice; which is being focused on financial wellbeing behaviours and coaching rather than products.

On a recent episode of the ifa Show podcast, Mr Fradley said the “best” advisers are the ones trying to truly understand their client in order to create a genuine connection.

“I think the best advisers now, the ones setting the standard, are saying ‘What does it look like in 10 years for you from a social interaction perspective? How are you gaining your social needs once you're retired? Or how are you building meaningful connection with your friends and family? What are you doing from a sense of purpose and how do we facilitate that and money being a tool to enable that?’

“And that connection becomes far more than just, ‘Well, they did my super and insurance.’ That's the hygiene, that's the easy stuff. This becomes really understanding who we're working with, intrinsically caring for them and to a point where we are taking what they say is important and what they do, and we are combining those two things to be the same, in the same direction,” Mr Fradley noted.

Read the full opinion piece from Mr Zietara here.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.